ABSTRACT
This study has examined the costs incurred by Microfinance institutions in late, early or no response to the HIV/AIDs pandemic in Kenya. The general objective of the study was to investigate the costs of MFls in response to HIV/AIDS crisis in Kenya. The basic objectives of the study are: to identify and analyze the costs incurred by MFls in response to HIV/AIDs effects to their clients; to examine how staff administration costs are affected as a result of MFI staff being infected or affected by HIV AIDS crisis in Kenya; to identify and analyze the effect of a client's withdrawal of savings on an institution's borrowing costs and to identify the social responsibility cost for the purpose of disseminating information about HIV/AIDS The analysis of the study shows the trend of costs that result on the responses. Such costs include writing off of bad loans, provisioning for bad and doubtful loans and declining liquidity of the Microfinance institutions which are on rise. The early responses strategies such as training the clients and staff and educating them about the pandemic, development of special products for PLWAs as well as developing HIV/AIDs policies are at very minimal level or completely lacks in some MFls. In conclusion MFls should realize that HIV/AIDs is already having disastrous economic effects on their market segment leading to high costs on the responses. Early responses can drastically reduce the spread of pandemic and save the costs of late and non response. Early responses include training and educating the society about the pandemic. HIV/AIDs policy manuals should be developed to formalize the ways in which the pandemic can be contained. More over the institutions should join hands and fund events to disseminate the information about the pandemic.
